NZD/USD – New Zealand dollar shrugs off weak commodity numbers

The New Zealand dollar has gained ground on Thursday, the fifth straight winning session. In North American trade, NZD/USD is trading at 0.6639, up 0.34% on the day. In New Zealand, ANZ Commodity Prices slowed to 0.0% in May. In the U.S., unemployment claims rose to 218 thousand, above the estimate of 215 thousand. On Friday, the U.S. releases nonfarm payrolls and wage growth.

With the Federal Reserve sending hints that it could ease monetary policy later this year, the U.S. dollar has been under pressure. The New Zealand dollar has taken advantage, gaining 1.6% this week. The currency is on track to post its strongest weekly gains since mid-February. At the same time, domestic economic conditions remain soft. New Zealand is heavily dependent on its export sector, and this week’s commodity releases have raised concerns. The ANZ Commodity Price Index slowed to 0.0% in May, the first time it failed to record a gain since December. Earlier in the week, the GDT Price Index, a key gauge of dairy prices, declined 3.4% in June. This marked a second straight decline. The slowdown in China has had damaged the New Zealand economy, and with the U.S.-China trade war showing no signs of easing, New Zealand’s economy and the New Zealand dollar could face headwinds.

Since raising rates back in December, the Federal Reserve has sounded neutral with regard to rate movement. However, the Fed made a dramatic U-turn this week, with Fed Chair Jerome Powell hinting at a rate cut. On Tuesday, Powell said that the Fed would “act as appropriate to sustain the expansion”. It was also noteworthy that Powell did not mention his “patient” approach to monetary policy, which has been a buzzword in his recent comments. Also this week, St. Louis Fed president James Bullard said that the Fed might have to lower rates shortly due to low inflation and the ongoing trade war with China.

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NZD/USD Fundamentals

Wednesday (June 5)

• 21:00 New Zealand ANZ Commodity Prices. Actual 0.0%

Thursday (June 6)

• 7:30 US Challenger Cuts. Actual 85.9%
• 8:30 US Unemployment Claims. Estimate 215K. Actual 218K
  
• 8:30 US Revised Nonfarm Productivity. Estimate 3.6%. Actual 3.4%
• 8:30 US Revised Unit Labor Costs. Estimate -0.9%. Actual -1.6%
• 8:30 US Trade Balance. Estimate -50.5B. Actual -50.8B
• 10:30 US Natural Gas Storage. Estimate 110B
• 13:00 US FOMC Member Williams Speaks

Friday (June 7)

• 8:30 US Average Hourly Earnings. Actual 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 180K
• 8:30 US Unemployment Rate. Estimate 3.6%

*All release times are DST

*Key events are in bold

NZD/USD for Thursday, June 6, 2019

NZD/USD June 6 at 11435 DST

Open: 0.6616 Low: 0.6644 High: 0.6616 Close: 0.6639

NZD/USD Technical

NZD/USD posted slight gains in the Asian session. The pair was steady in European trade and has recorded small gains in the North American session

• 0.6607 is providing support
• 0.6699 is the next resistance line
• Current range: 0.6607 to 0.6699

Further levels in both directions:

• Below: 0.6607, 0.6539 and 0.6424
• Above: 0.6699, 0.7055 and 0.7124

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